June 26, 2012

Truth Test: Cynthia Dill on income inequality

By Michael Shepherd mshepherd@centralmaine.com
Staff Writer

State Sen. Cynthia Dill, D-Cape Elizabeth, speaking at the Maine Democratic Convention earlier this month:

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Cynthia Dill at the Maine Democratic Convention.

File photo/Joe Phelan

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ABOUT TRUTH TEST

TRUTH TEST is a regular feature of MaineToday Media's campaign coverage in which we cast a critical eye on the truthfulness of advertising and public comments by political candidates.

WATCH this speech: tinyurl.com/7luhs9u

"Our problem is that the top 1 percent of Americans take in a quarter of this nation's riches, and continue to see their fat incomes grow, while 99 percent of us watch our income and quality of life fall off a cliff."

The gist of Dill's statement – that most Americans are falling behind – is true.

The Paris School of Economics website has a calculator that tracks income shares up to 2010 in many countries, including the United States.

In 2000, the average person in the bottom 90 percent of income in America earned a yearly income of $34,000, adjusted to 2010 dollars. In 2010, the average reached $29,399, its lowest point since 1993. The average fell each year from 2007 to 2010.

Are incomes falling off a cliff? That depends on your fall. But it’s fair to say Dill has the right idea based on the data.

But Dill’s numbers on the rich are inaccurate. She is apparently aiming between available data on the income and wealth of the nation’s wealthiest 1 percent. Wealth inequality – the gap in net worth or assets – is far greater than income inequality.

In 2010, the calculator says, America’s top 1 percent took in 17.42 percent of the nation’s income. But a 2011 report from the nonpartisan, liberal Economic Policy Institute says that in 2009, the top 1 percent owned more than 35 percent of net worth in the nation and more than 42 percent of net financial assets.

Dill isn’t quite right that the income of your average 1-percenter is going up, according to the calculator. The 2000s have been kind to the ultra-rich. Their average income in 2010 was $857,477, up from just under $815,000 in 2009. But it was over $900,000 each year from 2005 to 2008, adjusted to 2010 dollars.

Verdict: The income of the average 1-percenter is growing but has recently dropped. While Dill’s numbers are off when it comes to their share of wealth, she’s correct in the thrust of her argument that the average American has fallen behind financially.

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